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Tax Office avoids big stick with lodgement rules

The ATO is going easy on late-lodging SMSFs by suspending their details on Super Fund Lookup rather than the “big stick” approach of a $10,000 penalty, according to ASF Audits.

SMSF Sarah Kendell 27 September 2019
— 1 minute read

Speaking in a webinar hosted by Accurium on Wednesday, the SMSF auditor’s executive general manager of technical services, Shelley Banton, said the new rules amounted to a “warning flag” from the ATO, given that the potential penalties for failure to lodge meant the office could have taken a much harsher approach.

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“The maximum penalty available is 50 penalty units or $10,500, so the ATO has actually adopted a softer approach for non-lodgers, as opposed to issuing a fine of $10,500 which would have spooked a lot of trustees,” Ms Banton said.

Her comments were echoed by ATO assistant commissioner for SMSFs Dana Fleming, who reminded trustees in a LinkedIn post on Thursday that lodgement of annual returns was a critical compliance consideration.

“Lodgement on time is one of the fundamental obligations of a trustee and failure to lodge a return on time is a breach of not only the Income Tax Act, but also the superannuation laws,” Ms Fleming said.

Ms Banton added that while the SFLU suspensions would affect trustees awaiting an APRA rollover or their first contribution in a new job, the disruption would not impact the majority of SMSF members.

“Once an employee has had several contributions paid into the fund, an employer is not going to check the fund’s status [on SFLU], but it’s an important flag for the ATO because non-lodgers typically mean compliance breaches, and for auditors the reason audits are usually late is because there are complications or compliance breaches,” Ms Banton said.

While funds would not be listed as “complying” on SFLU if they had an overdue return, Ms Banton said this did not amount to the fund being classified as “non-complying” in the legal sense.

“The question is, does that mean the fund is non-complying? But the only way a fund can be made non-complying is when the commissioner revokes their complying status and issues a non-compliance notice,” she said.

Tax Office avoids big stick with lodgement rules
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